GLOBAL MARKETS-U.S. stocks gain after steep decline, oil rises

                                
 * Energy leads U.S. stocks higher after steep 2-day slide
                                
 * Gold gains about 6 pct buoyed by weak dollar, rising oil
                                
 * Profit-taking pressures bonds, yields off historic lows
                                
 * Oil rallies from below $50 after recent sharp decline
 (Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
                                
 By Herbert Lash
                                
 NEW YORK, Nov 21 (Reuters) - The dollar and yen fell and
U.S. stocks rose in choppy trade on Friday as bargain hunters
moved gingerly back into equity markets that have suffered one
of their worst weeks on record.
                                
 Oil prices inched higher after plunging earlier this week
to lows last seen in May 2005. The higher prices for crude and
the weaker dollar helped drive up gold almost 6 percent to its
highest level in a month.
                                
 U.S. government debt prices slumped, with yields rebounding
from Thursday's historic lows, as traders booked profits on
this week's unprecedented gains in a safe-haven stampede from
stocks into bonds and cash.
                                
 Rising energy shares helped lift U.S. equities, countering
a drag from financial shares amid fresh worries about the
future of embattled No. 2 U.S. bank Citigroup <C.N>, which slid
below $4 a share before paring some of its losses.
                                
 U.S. stocks, as measured by the broad S&P 500, are down
about 13 percent this week, surpassed in the past three decades
only by an 18 percent plunge in the five days ended Oct. 10.
                                
 "It feels like we've reached a point where total fear is
receding a little. There's an inkling of hope that we may be
near a bottom, which is reflected in equities and high-yielding
currencies today," said Boris Schlossberg, senior currency
strategist at GFT Forex in New York.
                                
 Before 1 p.m., the Dow Jones industrial average <.DJI> was
up 118.51 points, or 1.57 percent, at 7,670.80. The Standard &
Poor's 500 Index <.SPX> was up 11.81 points, or 1.57 percent,
at 764.25. The Nasdaq Composite Index <.IXIC> was up 15.21
points, or 1.16 percent, at 1,331.33.
                                
 But European bourses suffered a broad sell-off spurred by
grim euro zone manufacturing data, and the price of government
bonds in Europe was little changed. British government bond
futures rose, extending a week-long gilt market rally.
                                
 European stocks fell for the seventh time in nine sessions,
with pharmaceuticals the biggest drag. Utility shares and
mobile phone companies were the next biggest drags to the
FTSEurofirst 300 pan-European index.
                                
 Fresh fears over the financial sector knocked down banking
shares, such as Societe Generale <SOGN.PA>, down almost 14
percent.
                                
 Pharmaceutical stocks, which had been resilient over the
past few weeks, took a beating with four of the top five
contributors to the decline in the drug industry.
                                
 Sanofi-Aventis <SASY.PA> fell 10.3 percent, AstraZeneca
<AZN.L> 8.7 percent, GlaxoSmithKline <GSK.L> 6.9 percent and
Novartis <NOVN.VX> 6.4 percent.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
closed 2.6 percent lower at 760.97 points, and lost about 11.7
percent on the week.
                                
 "Beyond worrying about recession and corporate results,
people have now started to worry about balance sheets, and not
just banks' balance sheets," said Benoit De Broissia, an
analyst at KBL Richelieu in Paris.
                                
 Analysts warned that investor anxiety over the state of the
global economy has hardly evaporated.
                                
 Investment bank Goldman Sachs forecast more pain,
estimating real U.S. gross domestic product would fall by 5
percent on an annual basis in the current quarter and
unemployment would reach 9 percent in the fourth quarter of
2009.
                                
 In currency markets, the euro and sterling relinquished
much of their rise against the dollar by midday, indicating
investors' continued unease.
                                
 "We see little to suggest to us that today's drop (in the
dollar and yen) reflects an underlying trend," said Nick
Bennenbroek, head of currency strategy at Wells Fargo in New
York.
                                
 The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> off 0.39 percent at 87.944.
Against the yen, the dollar <JPY=> rose 1.44 percent at 95.40.
                                
 The euro <EUR=> rose 0.80 percent at $1.2557.
                                
 The benchmark 10-year U.S. Treasury note <US10YT=RR>
slipped 66/32 in price to yield 3.24 percent. The 2-year U.S.
Treasury note <US2YT=RR> fell 8/32 to yield 1.09 percent.
                                
 U.S. light sweet crude oil <CLc1> rose 51 cents to $49.93 a
barrel.
                                
 Spot gold prices <XAU=> rose $50.35 to $795.45 an ounce.
                                
 Asian stocks overnight rebounded from five-year lows. The
MSCI index of Asia-Pacific stocks outside Japan climbed 3.3
percent <.MIAPJ0000PUS>, while Japan's Nikkei average <.N225>
added nearly 3 percent.
 (Reporting by Leah Schnurr, Richard Leong, Steven C. Johnson
in New York, Joe Brock, George Matlock and Humeyra Pamuk in
London and Blaise Robinson in Paris; Writing by Herbert Lash;
Editing by Leslie Adler)